Goldman Sachs has cautioned that President Donald Trump’s proposal to end quarterly reporting requirements for U.S. companies could produce unintended consequences, citing Europe’s inconsistent disclosure practices as an example of how less frequent reporting can confuse investors without improving long-term results.
In Europe, roughly half of STOXX 600 firms release quarterly updates, while the other half report semi-annually, creating irregular reporting cycles and making it more difficult for investors to track earnings trends. The uneven schedule also means some quarters have thin data or are heavily weighted toward certain industries or countries, complicating efforts to assess underlying performance.
Goldman Sachs strategists note that arguments for reducing reporting frequency often emphasize relieving management from short-term pressures. Yet, as they observe, “it seems somewhat ironic that U.S. companies – with quarterly-frequency reporting requirements – have outshone European and U.K. companies in terms of most longer-term metrics, including growth rates, rates of investment and ROE,” according to a team led by Sharon Bell.
Europe offers a natural comparison. Goldman found little difference in valuation or return-on-equity (ROE) between firms reporting quarterly and those reporting every six months. Research, including work from the CFA Institute, similarly suggests that reporting frequency has limited influence on investment levels, though it can affect analyst coverage and the accuracy of forecasts.
The strategists also highlight that quarterly reporting can benefit investors by enhancing transparency and helping prevent problems from going unnoticed. However, it may also have drawbacks, such as pushing management to focus excessively on short-term earnings.
In practice, European investors concentrate primarily on companies that report quarterly, giving these firms more visibility and liquidity, while those with semi-annual updates receive comparatively less attention. Nearly all energy sector firms in Europe report quarterly, while most consumer staples companies report semi-annually, creating uneven perceptions of performance across sectors.
Overall, the strategists argue that the U.S. benefits from the uniformity of quarterly reporting, which facilitates comparability across companies and sectors. Europe’s mixed approach, however, demonstrates that moving away from quarterly reports would not necessarily alter valuations or investment outcomes.
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